Spam Blocked

Subscribe to "Joyce Clark Unfiltered"

Enter your email address to subscribe.

Email Address

About Joyce Clark

Contact information for Councilmember Joyce Clark
Home: 623-772-9795
Cell: 602-320-3422
Office: 623-930-2249
Please call between the hours of 9 AM - 5 PM
Email:
clarkjv@aol.com
jclark@glendaleaz.com
Joyce Clark is a 49 year resident of Glendale. She has a BA in History and Education and graduated from the College of Notre Dame of Maryland. Her past careers include teacher of high school history, small business ownership of a book store, a professional ceramist and was the founder of a retail craft gallery. Joyce and her husband, Charles, have three children and seven grandchildren.

Joyce was first elected as your Yucca district Councilmember in 1992 and served Glendale and the Yucca district from 1992 to 1996. Joyce took a four year break from public service when her mother was diagnosed with Alzheimer’s to personally care for her. In 2000 she successfully ran again for Yucca district councilmember as a write in candidate against the incumbent. She is the only candidate in Arizona to achieve a write in victory over an incumbent. She was your voice for the Yucca district for 16 years.

Joyce retired in December, 2012, and as a private citizen Joyce did many of the things she never had the time to pursue. Two of those are the tender care and feeding of her koi pond and blog writing on issues in Glendale, Arizona.

In March of 2016, Joyce announced that she would leave retirement and run for the Yucca district council seat in Glendale. Once again Joyce defeated an incumbent and on December 13, 2016 she took office as the Yucca district councilmember for another four year term, ending in December of 2020.

Joyce is the only elected official in the State of Arizona to have defeated an incumbent as a write-in candidate and then to defeat a second, different incumbent as a candidate.

In 2009, a scant 4 years ago and what now seems like an eternity in the Coyotes saga; Ice Edge which has now morphed into Renaissance Sports and Entertainment; which has now has a subsidiary called Ice Arizona was in the hunt to purchase the Phoenix Coyotes. Its competitor at the time was Reinsdorf and Kaites.

Keith McCullough

Keith McCullough was part of the Ice Edge group and was interviewed on July 31, 2009 by Bloomberg TV. During that interview he was asked about the Ice Edge bid and during the course of his answer at one point he said, “We actually have a 3 to 5 year plan coming out of an economic cycle in an area that we think is opportunistic.”

When asked about their intent to play Coyotes games in Saskatoon and Halifax, Mr. McCullough said, “People in Phoenix don’t want to go to a hockey game anyway. You might as well bring them to Canada where people will go bonkers to watch a hockey game.”

Both of his answers sent the Coyote nation into shock. There was fear and anger that this group’s real intent was to move the team in 3-5 years because in their view the hockey market in Phoenix was not nearly as profitable as the market in Canada.

Recently McCullough has tweeted confirming his involvement in what is now known as Ice Arizona, scheduled to receive the NHL’s Board of Governors’ blessing at any moment as well as consummating the NHL’s sale of the team. Ice Arizona’s current slogan is “Here to stay.” It’s time for McCullough to stand up. Does he still hold to the sentiments expressed on that Bloomberg TV interview? Will he disavow his previous remarks? Has he fully embraced Ice Arizona’s intent of “Here to stay?” Legitimate questions requiring legitimate answers for the Coyote nation.

Lately there has been a rash of media stories about the Attorney General’s office receiving complaints about the now infamous meeting between NHL Commissioner Gary Bettman and Deputy NHL Commissioner Bill Daly, Renaissance Sports and Entertainment (RSE) principals and Glendale City Councilmembers on May 28, 2013. Immediately following that event I posted about the now famous concept of a “walk around.” The media picked up on it followed by official complaints. Of course we see the fine hand of Councilmember Alvarez aided and abetted by Reverend Maupin in this blame game.

The “walk around” has been a procedure whereby an applicant/ developer of a land parcel met with one, two or three councilmembers at a time. The planned project was explained and the councilmember(s) offered commentary. Usually the applicant was not in the final stages of a project and wanted feedback prior to developing a final proposal. It was also used by staff to brief councilmembers on a variety of items. In either case the staff person or applicant was seeking further refinements or clarification from councilmembers on a project or item before proceeding.

The first question to ask about the May 28 2013 meeting was why didn’t the city call for an executive session? Did it not have enough time (24 hours) to post such a meeting? Who knows? In hindsight an executive session would have been far more preferable as this contract and its deal points was Hot Topic #1 in Glendale and across the Valley. All of the councilmembers would have heard exactly the same information about the RSE deal at the same time. All would have had an opportunity to comment.

As for this particular “walk around” being no more than a “meet and greet” opportunity it would have been essentially unproductive and a waste of time. Mayor Weiers, at one point, told the media that only the broad outlines of the deal were offered—in other words, generalities, not specifics. Even if that were the case, it stretches incredulity to believe that there was no reaction to the generalities from councilmembers. Now Interim City Attorney DiPiazza is tasked with defending poor judgment. Do you think anyone is going to admit to having deal point discussions? Not on your life if it can lead to fines or even removal from office.

Neither side will be unscathed in this latest debacle. There have also been complaints lodged with the AG’s office against Councilmembers Alvarez and Hugh for violating executive session by discussing the Beacon bids publicly at the July 2nd council meeting. What I find fascinating is that Ken Jones, an avid Alvarez cabal member, leaves council chambers BEFORE either Alvarez or Hugh speaks about the Beacon bids and reveals information about several of the bids to the media. How could he have possibly have had that information unless someone who attended the executive session where it was discussed gave it to him?

The old crystal ball says the complaint against the entire council (sans Alvarez who refused to be in the same room with hockey people) will go nowhere. Unless someone is willing to ‘fess up there will be no substantiating proof for the complaint. On the other hand, council meetings are taped and one can go to the city website and view the July 2, 2013 meeting in question and see Ken Jones leave prior to Alvarez’ and Hugh’s comments about the Beacon bids. There, on video, for all to see is the proof required. How it is interpreted by the AG’s office will surely determine their fate.

Congratulations to all who worked so hard to keep the Arizona Coyotes in Glendale. Your tremendous effort has been rewarded. Now the hard work begins…not for the fans but for the principals — RSE and the city — in the deal. I wish them much luck now and in the future. I respect the current council’s decision and can appreciate what it took for them and out of them to arrive at their decision-having been there several times previously.

This 4 year odyssey has taken its toll in friendships and relationships as nerves and tempers frayed. That is my only regret. Just as with many of you, it is time for a brief hiatus — time to recharge and renew. For the next week I will do exactly that and no blogs will appear. When I come back…roaring…there will still be many other Glendale issues — and the pond to write about.

I want to commend attorneys for both Glendale and RSE. When I received the original June 26th draft of the Agreement consisting of 93 pages it took me quite a few hours to review it line by line. I ended with 18 pages of notes and they have been quite handy and well worth my time. I had quite a few issues with the original document. In reviewing the latest version dated June 28th I am quite pleased to see that many – not all – but many of my issues have been addressed. One that made me laugh out loud was the provision that Glendale would receive 100% of the Naming Rights for a future theater/stage space to be constructed within the bowl. Further along in the original document it specified that Glendale must pay for its construction or the Arena Manager would receive the proceeds of Naming Rights and apply them as reimbursement for construction costs. That provision, thankfully, has been changed and it is no longer Glendale’s responsibility to fund its construction but it still has the right to receive 100% of the Naming Rights. It appears that cooperation and communication by both sides has gone a long way to resolve many of the issues.

However, there remain several major, outstanding issues. One of those issues is that of the Noncompetition/Non-Relocation Agreement. The original June 26th agreement refers often and specifically to the dual concepts of non-competition and non-relocation although the document was never provided publicly. So there was no companion document to review. This, in conjunction with the absence of any exhibits accompanying the release of the original version, is troubling but that is for another time. In the new version of the agreement reference is now made solely to a Non-Relocation Agreement. The concept of non-competition has been removed in its entirety. Is this positive or negative? There is no way of knowing since there is nothing with which to compare the current Non-Relocation Agreement.

Another major shift from previous deals is the concept of mediation vs. arbitration. In previous deals arbitration was the “Dispute Remedy.” In all versions of the RSE Agreement mediation is the dispute resolution mechanism. There is a difference between the two procedures. In mediation a neutral third party acts as a facilitator but is not a decision maker. Neither party is required to complete the process nor is it legally binding. The mediation resolution can be appealed through the legal system. In arbitration the neutral party acts as judge and jury. The decision is generally binding and cannot be appealed, except under very special circumstances. Mediation can be more expensive because it allows for legal appeal as opposed to arbitration which is legally binding. So the question becomes why RSE’s insistence on mediation for it seems to be upon their insistence and not that of the city.

We now know that RSE used a figure of 23 non-hockey events with attendance of 15,000 per event. Those numbers are a component of their calculations in determining the revenues from the parking surcharge and ticket/supplemental surcharges. It appears to be over inflated but it is their number, not mine, not the city’s. That goal should be acknowledged within the Agreement by incorporating accompanying performance penalties and incentives. If RSE meets less than its self-proclaimed goal of 23 non-hockey events there should be a monetary penalty. It is a concept only used in the Agreement in conjunction with hockey games. If less than 41 games are played in the arena, there is a $150,000 penalty per game paid to the city. However, if RSE overachieves or underachieves in booking non-hockey events, it should be rewarded/penalized for doing so but there is no mention of such a concept within the Agreement. Fairness dictates that non-performance be penalized and success rewarded.

Another interesting concept within the Agreement is language that exempts the Arena Manager from governmentally imposed lease taxes on the property. If, for some reason, the Arena Manager does have to pay them, that amount will be deducted from the City’s total annual revenue to be received. Hmmmm. Should there be lease property taxes imposed that have to be paid the city is required to pay them.

It also appears that instead of allowing the city’s contribution to the Capital Improvement Fund to accumulate year over year, the Capital Improvement Fund is set to “0” every year and the funds within it revert to the Renewal and Replacement Fund that is spent solely at the Arena Manager’s discretion.

The last major change to the document is the city addition of its own opt-out provision. The city views this action as entirely appropriate. Their assumption may be based on the notion that the city has more “skin in the game” than does RSE. $15M for each of 5 years equals $75M. It has been widely reported that RSE’s equity (or “skin”) is $45M. The proposal is that after 5 years, each side should have the option of deciding whether to continue, especially if one side or the other has accumulated over $50M in debt. That option, if it remains in the Agreement, would signal that RSE’s “enhanced revenue streams” did not perform as advertised. The city’s financial shortfall in this deal is of its own making. The current council will either be comfortable in its assumption that it can weather the effects of the shortfall or it will not. Continued insistence by the city on this provision destroys RSE’s ability to secure loans because it nullifies the very element they MUST have, which is a guaranteed $15M from the city.

In my notes I have probably identified another two dozen minor issues that require further negotiation. Listing all would turn this blog into a book. I will not inflict that agony on you. It appears that with some further negotiation and communication this Agreement could work but it does not resolve Glendale’s fundamental issue of covering a monetary shortfall of $3M annually.

Many have asked me to reveal my position on this issue. That I will not do. I have provided you with financial information on the “enhanced revenue streams” as well as information on Glendale’s precarious financial position and Agreement points that need further resolution. Many of you reading this blog have expertise in business budgets and corporate negotiating. My role is to offer municipal expertise and to provide context to balance that. It is up to you to decide if this is a good deal for Glendale. This is exactly what every current councilmember is wrestling with. As leaders of this city they have the prime responsibility of insuring the continued financial health of the city. My feeling is that some are now struggling with recent decisions and recent votes and beginning to realize the effects of those decisions.

Will this Agreement help or hinder Glendale’s continued financial health? Of course there is the overwhelming element of politics. Some councilmembers’ positions will be taken as a result of ego; others simply wouldn’t say ‘yes’ even if God invited them into the Pearly Gates; still others have only a partial grasp of the entirety of the deal. But it is not my call. I am no longer a sitting councilmember. Whatever their collective decision I will accept it and abide by it, as everyone should reasonably do.

Fasten your seat belts — if past history is any indication we are in for a bumpy ride. I hope that I am wrong but there may very well be challenges to this Agreement.

In my last blog $3,109,580 was identified as the shortage Glendale faces with acceptance of the Renaissance Sports and Entertainment (RSE) bid. This requires looking at the city’s overall financial health. A useful measurement is to look at the city’s General Fund “Ending Balance” (it may be called Contingency Fund or Rainy Day Fund). It will be helpful to refer to slides presented at the city council workshop of June 29, 2013. Here is the link:

Some historical context is in order. In the early to mid 2000s Glendale’s economy, along with the rest of the nation’s, was robust. The arena had been built, Westgate was taking shape and growing, developers were buying land in the surrounding area and submitting development plans faster than they could be processed. When the national recession first took shape the city had General Fund revenues of $131,807,000 and maintained an Ending Balance of $49,338,000 (well over the city policy of 10%). All “expert” advice, at that time, projected a deep recession of 3-5 years and a slow recovery. Council had the choice of starting to make major budget cuts (including lay-offs) or using its Contingency Fund. It chose to use its Contingency Fund to avoid lay-offs and to weather the recession. Was it the correct decision? Obviously not, but “Hindsight is 20-20.” We now know that budgetary cuts should have been made then, just as municipalities all over the valley did, for cuts are cumulative and can help to alleviate the need for drastic cuts in the future. There were some budgetary cuts made at the time and employee furloughs were instituted but those strategies were not strong or deep enough and came too late to create the desired outcome. Those following the Coyotes saga no doubt recall former Mayor Scruggs complaining bitterly and saying that we were told that Glendale was different and no cuts were necessary. What was done was done but it set up the current fiscal crisis the city now faces. By the end of the decade with the national economy still in recession the previous council had learned a painful lesson and was committed to making budget cuts and began a plan to do so.

We come to the present. The city’s total General Fund revenues for Fiscal Year (FY) 14 are $161,500,000 and projected to increase by a mere $800,000 over the next 5 years (FY 18) to $162,300,000. In the intervening years there are General Fund revenue increases of nearly $18M but they are temporary increases based upon the raised sales tax due to sunset in 5 years. After the 5th year, FY 2018, the sales tax increase sunsets and the General Fund revenue will revert to the level of FY 14. The temporary sales tax increase was designed to do one thing only. That was to provide the city some breathing room while it continued to make budget cuts of $5M a year for 5 years totaling $25M over 5 years AND rebuild its Ending Balance to a minimum of 10% of its General Fund revenues. It WAS a sound plan and a plan that allowed for a hockey lease. It is not the plan of the newly elected council for there are only scheduled cuts of $4.8M in FY15 and $9.5M in FY18 for a total of $14.3M. That is $10M shy of the amount that is needed to replenish the General Fund and will present problems when the sales tax increase disappears—unless this council decides to continue the sales tax increase ad infinitum. I suspect that is exactly what will occur despite its sunset promise included to gain citizen voter support to ratify the increase.

Now add a couple of facts. First, the Fire Department had a structural deficit of $3.5M this Fiscal Year, FY 14. It was fixed by budget amendments passed by council 6 weeks ago and on June 28th. It solved the problem—for this year only. Next year the Fire Department will face the same structural deficit of $3.5M with no direction given by this council as to where and how this money is to be found. Our second fact is at the June 25th voting meeting of Council a restructured contract with Southwest Ambulance was approved. (FYI: SW’s Martin Nowakowski, its Public Affairs Director, is a friend of Norma Alvarez and Sammy Chavira and supported both in their election bids) The old contract called for 2 ambulances that were in operation 5 days a week for 9 hours a day. The new contract calls for 3 ambulances in operation 7 days a week for 24 hours a day. It results in an increase of future expense to the city, in this contract of $1M. It is possible that SW may pick up $400,000 of the million dollars but there is still an increased contract cost of $600,000 that is a new city obligation. And it may interest you to know that city personnel assisting on these ambulances are paid overtime pay by Glendale. What a sweet deal. Council was briefed and was made fully aware of the increased cost to the city. Neither example of fact has corresponding cuts in other areas. In particular, the Southwest Ambulance vote passed without a single councilmember question regarding it. These two fiscal examples demonstrate that council still refuses to recognize the serious financial condition of the city.

The city’s Ending Balance for this Fiscal Year, FY 14, is $8M and equals only 5% of the General Fund revenues — not a good position in which the city finds itself. The good news, however, is that it does grow in the next 5 years and by FY 18 is $20.3M (or 12% of General Fund Revenues).

Why is the Ending Balance or Contingency so important? First, it is a measurement that bond raters look to in order to determine a city’s creditworthiness. It’s like an individual’s FICO score. The higher it is the lower the interest rate. It serves a second purpose in that it can be drawn upon in an emergency or when unexpected expenses occur. For instance, the $120,000 paid for a search of a new City Manager and the $500,000 for the audit as well as the Beacon consultancy contract were paid from Contingency as these were new, unbudgeted expenses. Contingency can be used to cover increases in the price of gas for city vehicles and it can be used to cover unplanned increases in medical premium costs. Right now, with only $8M in reserve, the city is living on the edge.

How does acceptance of the RSE bid affect the city’s Ending Balance (Contingency Fund)? Instead of $8M in reserve this year, it drops to $5.7M or 4% of the city’s revenues. By FY 18 instead of a healthy Contingency of $20M it is only $8.6M (in other words, in 5 years, it is exactly the same as today).

How does acceptance of the RSE bid affect the city’s budget? Its revenues do not change but its expenses have increased by $9M as the city goes from paying a $6M a year management fee to a $15M a year management fee. We must factor in the “enhanced revenue streams” and in doing so the city projects a $2.3M shortage for this budget year (FY 14). I have shown a figure of $3.1M which I believe to be more realistic. However, whichever figure is used, there is a shortage that has to be covered.

If the RSE bid is accepted there are only three ways that the shortage can be covered. Some explanation is required to better understand Option #3 offered below. The city established an escrow account by borrowing money from other funds, i.e., Sanitation, Vehicle Replacement, etc. It has $20M in it – not quite the full $25M owed to the NHL for the second year of arena management. If the RSE bid is accepted the NHL has publicly stated that they will accept payment of that $25M in installments of $5M a year for 5 years. The options are:

The city can make further budget cuts in FY 14 by reducing service levels to residents, cutting more employees or trying to find further efficiencies

It can pay the shortage from the Contingency Fund by drawing down the balance to $2 or $3M instead of the current $5.7

It can use the $20M reserved in its escrow account, earmarked for the second NHL payment of $25M, and bring down the reserved escrow amount by paying the NHL $5M this year and covering only this year’s shortfall of $2-3M

Imagine yourselves as a current councilmember for just a moment—not a Coyotes fan or a Ken Jones aficionado—but as someone charged with sound financial decisions for the city. Would you accept or reject RSE’s bid? If you chose to accept RSE’s bid which of the 3 options would you choose? Would you reexamine this council’s current financial plan to make strategic cuts and perhaps save Westgate and its future or would you make a leap of faith and decide that an anchor tenant is not necessary? It’s in your hands. In my next installment I will review items within the RSE contract that remain problematical for the city and could be resolved with further negotiation.

A number of people have asked me (as a former councilmember) to weigh in, pro or con, regarding the Renaissance Sports and Entertainment bid. It may very well become a moot issue if RSE rejects the city’s latest proposal to have the same 5 year opt-out clause as RSE enjoys. Until now I have instead spent all of my time since the original bid was made public reviewing and analyzing it. Note that a revised version has since been made public. In the newest public version changes that had been discussed at the city council workshop of June 28, 2013 are incorporated. There is now a joint defense clause, removal of all “novation” provisions and the city receives all insurance proceeds in the Casualty and Condemnation provisions. These changes and others make it a better deal for the city. Council gave direction to continue negotiations up until the eleventh hour (Tuesday, July 2nd council meeting at 7 pm). We can hope that RSE and the city will continue in the spirit of cooperation.

As for the deal itself let me share my analysis. Let’s look at the numbers. The first premise is that RSE MUST have $15M a year guaranteed by the city. Why? An assumption, that has never been refuted, is that RSE needs $15M a year guaranteed by the city to satisfy the lender’s (Fortress Investment) requirements. The city has an approved budget that allocates $6M a year thereby creating a $9M a year shortfall for the city. RSE has proposed to sweeten the pot and supplant that $9M a year by creating “enhanced revenue streams.” Some are revenue streams whose numbers can be accepted with some sense of surety. The hockey ticket surcharge is based on 41 games with an average attendance of 12, 630. Those are reasonable numbers based on past performance. You may think the average attendance figure is low but it is RSE’s number and to be applauded because of their conservative approach. The “enhanced revenue” produced from this calculation is $1,553,490. It is a number we can accept as valid.

The next number is the team rental of $500,000 a year. That is, of course, a reliable number. One obvious question is why does this number not increase over time? In previous deals the team rental charge escalated over time. Another fairly reliable number is the sales tax generated at hockey games. RSE pegs it at a little over $600,000 a year; the city uses a little over $400,000 a year. I am inclined to accept the RSE number for the sake of argument.

So far, so good. We know the city can rely on these “enhanced revenue streams” of Hockey ticket surcharge, team rental payment and sales taxes generated from hockey games. Those items total $2,690,420 and we can be confident in realizing that revenue.

But a look at the rest of the estimated revenue numbers show they appear to be overinflated. Let’s take the easiest one first, Naming Rights for which the city will receive 20%. Typically this fee is paid in installments. For argument’s sake let’s peg the Naming Rights fee at $10M. Generally, this would be paid over a period of years and often it is a 10 year period. That payment would be approximately $1M a year and the city’s portion would be $200,000 a year for 10 years. So instead of the RSE Naming Rights figure of $671,600 a year, a more conservative and reasonable number is $200,000 a year. As a point of comparison, this is similar to the Naming Rights deal at Chase Field and it receives a payment of $1.1M a year.

The parking revenue figure is highly inflated. The presumption is that all 5,500 parking spaces will generate $10.00 a space at every hockey game. Did you know that there are an additional 9,500 parking spaces at Westgate not subject to this surcharge? Hockey fans can park at Tanger, behind the AMC Theater, etc. and it is a short walk to the arena. Sooner or later, the owners of these businesses will become very unhappy to see hockey fans occupying their customer parking and will begin to charge…$5 a car which will be reimbursed to their patrons. I have also been informed that should there be a new parking fee imposed by the city and the team the Cardinals will charge $5 a car for their 6,000 spaces on Maryland Avenue, across the street from Jobing.com arena. There is also a secondary, but an equally important issue, the number of hockey fans parking in the Desert Mirage neighborhood across the street from Jobing.com arena will most surely increase. It is a neighborhood of over 1,200 homes and some hockey fans (although a minimal number) already park in their neighborhood on hockey game days. The RSE number also includes parking for non-hockey events with 23 events a year and 15,000 attending each of those 23 events. In my estimation it is unrealistic. More about that when we review the $5 per ticket surcharge for non-hockey events. RSE, and the city accepts, a figure of over $2M for parking revenues. This is way too optimistic and a more conservative and realistic figure is half that, or about $1M for parking revenues.

The last number RSE offered was revenue generated per year of $1,725,000 for a non-hockey ticket surcharge of $5.00 per ticket for 23 events a year and attendance of 15,000 at each event. I dug out old material I had related to arena event and attendance figures and I also reached out to people knowledgeable in the concert venue business. From 2003 (the year the arena opened) until today the maximum number of events ever held at the arena in one year that generated an attendance of 15,000 or more has been 15 events. Did you know that throughout the entire Phoenix Metro area there are typically 25 major concerts (what is called in the business, Type “A,” such as a Justin Bieber) a year? 4 of them were held in Jobing.com Arena this year. RSE’s estimate of 23 such concerts drawing 15,000 or better is wishful thinking. A more realistic revenue number for the non-hockey ticket surcharge would be under $1M a year. For the sake of argument, we will use $1M a year. How do these numbers add up? $200,000 a year for Naming Rights; $1M a year for Parking Revenue; and $1M a year for the ticket surcharge for non-hockey events totaling $2,200,000.

Let’s add our reliable, take-it-to-the bank number of $2,690,420 and our far more conservative number of $2,200,000. The total is $4,890,420 and the magic number in “enhanced revenue streams” that must be achieved to make the city whole is $9M. Oh wait, there’s still the Supplemental Ticket surcharge of $1.50 on every ticket. RSE’s number is $1,294,245. It is an overestimate because it is based on that same pesky non-hockey event estimate of 23 events with 15,000 or greater attendees. A more realistic estimate would be no more than $1M a year. So add another million dollars to our $4,890,420 and our final total of “enhanced revenue streams” is $5,890,420 – not the $6.7M used by the city or the $7.3 used by RSE. Yet we need $9M a year. We are short $3,109,580. How can that shortage of a little over $3M a year be covered by the city? Where will the money come from? In my next blog we’ll look at the city’s budget and its overall financial health.

This week, June 24-28, 2013 there are 3 city council meetings scheduled. First up is a Special workshop meeting at 1:30 PM today. It consists of Executive session (Esession) items only, meaning a secret session. We all know the topic of discussion is the Renaissance Sports and Entertainment (RSE) bid for arena management. It has been reported that the details of the bid may be released on Wednesday, June 25th. The only reason for this meeting is because RSE and the city (COG) are still negotiating the terms of the deal. There would only be two outcomes: 1. the council has accepted the terms and is comfortable with them or 2. the council still has issues with the final terms. Either way, this council has signaled that it is ready to put this issue to bed and vote on it on July 2nd. Keep in mind that just because the RSE bid has finally made it to a voting meeting does not insure a positive outcome. What it does signal is that the council is ready to vote, up or down, RSE’s bid and be done with the issue.

The evening meeting (voting meeting) of July 25, 2013 has 3 financial items of interest. The first, Item #8 is prepayment of $5.6M of General Obligation bonds (usually paid for from the city’s secondary property tax collection) by the Water and Sewer Enterprise Fund. This is an interesting strategy and may free up General Obligation bond capacity for future bonding…on what? We can only wait and see.

The second item, Item #26 is Authorization for Lease Financing of the City Hall Complex. In 2010, the city had to pay the NHL $25M to run the arena. This $25M has been paid to the NHL. Here’s where the money came from:

$21M loan from the city’s Landfill Fund

$4M loan from the city’s Sanitation Fund

In 2011, with the Coyotes ownership issue still not resolved, the city agreed to pay the NHL a second $25 to operate the arena. This $25M is still being held in a city escrow account. Here’s where that money came from:

$15M loan from the city’s Water and Sewer Fund

$2M from the city’s Technology Replacement Fund

$3M from the city’s Vehicle Replacement Fund

$5M to be paid with an unidentified source to NHL

This lease-back deal will replace:

$15M loan to the City’s Water and Sewer Fund

$4M to the city’s Sanitation Fund

$2M to the city’s Technology Replacement Fund

$3M to the city’s Vehicle Replacement Fund

$5M whose source had been unidentified and unfunded to pay the last of the NHL’s second $25M

$1M as a new project to upgrade the city’s Human Resources software

As you can see, that leaves 1 loan payment outstanding and that is the $21M loan from the city’s Landfill fund. That $21M is part of a reserve account to cover landfill closure. Since the landfill is not anticipated to close for 30 years, the city can afford to repay this reserve account over the next 30 years. Is this a good strategy? Yes, it is. It replenishes those Funds so that they can once again operate effectively and gives the city some breathing room to pay back those costs associated with the NHL’s operation of the arena for 2 years. It is a strategy that hopefully this council will approve.

The last item, Item #27 is an increase in rates, primarily to commercial customers for roll-off bins and disposal rates. The rental cost of a roll-off bin increases from $160 to $175 and the disposal fee per ton increases from $18 to $20. These are fees that have not been adjusted in quite some time. As usual, when there are rate increases, it becomes a double-edged sword. As the rates go up, the number of customers may decrease dependent on market competition by private sanitation companies. Nevertheless it is an increase long overdue.

The third and Special Meeting is scheduled for June 28, 2013. Do not look for a vote on the Coyotes unless this meeting agenda is changed and posted by 5 PM on Wednesday, June 26th. . The city, by law, must have its final adoption of Fiscal Year 2012-13 Budget Amendments and the Fiscal Year 2013-14 Property Tax Levy before July 1, 2013. These items satisfy that legal prescription and will be largely unnoticed by Glendale residents due to its final adoption on a Friday morning at 9 AM. The other two items, fire-related for strength training and medical transport, were added simply because they could be at this meeting.

There you have it. Three meetings scheduled. Only one of which is the Coyotes ownership issue and we are not privy to its goings on. The other two meetings deal with financial issues created by or related to arena management.

The finale of the Coyotes ownership RSE bid is still scheduled for July 2, 2013. Are there 4 affirmative votes? Only the councilmembers know or think they know. If RSE still wants $15M a year as the management fee and cannot or will not guarantee a minimum of $9M in “enhanced revenue streams” to the city this council may find it a difficult deal to swallow. Are we about to experience deju vu? The very mechanics of the deal could cause the Goldwater Institute to reappear. I suspect they are watching very, very closely. Then there is Ken Jones and his ilk who absolutely hate anything Coyote related. Could they mount another referendum drive? Yes, they could and would just to stall the deal. After all, how long will Fortress Investment Group leave an open-ended loan available to RSE?

Here is the transcription of Councilmember Gary Sherwood’s Sports 910 radio interview of Wednesday, June 19, 2013. There is no transcription of the last question asked as it was related to the Cardinals. There is no commentary offered. His words speak for themselves.

Sherwood Response 1 (SR 1): “Pretty much went the way I had anticipated. For most of the could they were seein’ some of the deal points for the first time. You know, had discussion on ‘em and I think there’s a lotta good that came out of it. I think there’s couple of things that had to go back to the Renaissance. I think they’re very doable. I think we’re waiting right now to get those things in writing and then there’s another meeting scheduled for Friday morning. Hopefully we’ll have consensus to take that to a public meeting. My concern, you know, was that we give the public time to vet this. So even though there’s a place holder meeting for the 28th of June there could also be one on July 2nd. So, we’re sittin’ here on the 19th, we’ll discuss this again on the 21st. If we’re good to go on it in terms of we think we have council support then either that information gets out later in day or Monday at the latest and the public has that week to vet it. We could still vote on it on the 28th. I think by Charter we’re to have it out there for 72 hours. I think we’ve always tried to do a little better than that. Again, this just came to us about four weeks ago. We had to quit acting like car dealers and each of us come with our best, you know, what we needed and their best deal instead of taking two months to go back and forth. And I think that’s what’s occurring.”

RQ 2: “That’s good to hear now. But it does sound like there’s sill some negotiation that have to take place. Do you have time to execute all that?”

SR 2: “I think so…I think so. I mean, you know, they really haven’t give us a deadline. I’ve always had July 9th nailed on my calendar. I don’t know that that maybe…I’m hearing some undertones that it’s gotta be July 2nd. I don’t know that July 9th works. There’s a few people that are going to be out of town on that week. So, I think, again we’re lookin’ at, you certainly can’t have a meeting on the 5th because that’s a long holiday weekend and I think the public would think we’re trying to pull something over on ‘em. So, I think the 2nd. Although no one’s called it that. I think that’s the date we’re shootin’ for. It could happen the previous Friday. Again, I think, I think what came out of yesterday was to be expected. There was a couple of things that we felt uncomfortable with. But surprisingly they were kinda simple things in the scheme of things. So, with that, I know our Acting City Manager in on the phone again this morning and my understanding is that those are gonna be doable in some kind of form or fashion. That should make it a go although I guess I gotta be careful of that because we’ve been down this path so many times.”

RQ 3: “Gary, when it comes to the actual lease, I mean is there an out clause? I mean is that stuff that’s still being negotiated?”

SR 3: “ Yeah, you know, I know previous council have been hung up on the length of those because they didn’t feel like there was enough time to give, you know, the fans, the sponsors, you know, people would be vested that they thought they’d have the rug pulled out from underneath them. But again, when you look at five year, uh, if truly someone’s makin’ an effort on this we gotta know whether hockey will make a go of it. I think, if ya look at the last 3 or 4 years with the threat of the team leaving every year you gotta five the folks over there, Mike Nealy, Jim Foss, and company a lot of credit for what they were able to do, um, with what sponsorships they were able to sell and keepin’ the fan base somewhat energized, um, and of course we had a good product, you know, this is a fickle sports town. We know that if you don’t have a winning product, you know, a lot has been said you know, about attendance figures over the years…10,000, 11,000. So when the DBacks made their run in their last championship they weren’t…their average attendance wasn’t even 50% of their capacity so and I know, baseball’s a little bit different to compare to there, those say hockey and basketball. But, you know, we got knocked a little bit for that. I…I think we truly, um, can make this a go, um, it just hasn’t, you know, it was under managed before, um, we got good management in there and then we didn’t have an owner. So, you know, there’s a lot of things, good things, that occurred over the last 3 and 4 years and givin’ the team with a little bit more of a budget that I’m sure they coulda done more and, um, so I’ve always been optimistic on this. And it’s not just for hockey for me. It’s just for that area. You know, if you don’t have a major tenant there, um, it basically can almost be shuttered. And again, for the mega events we’re trying to attract next door, you know, at the stadium and also the arena, the NCAA Four, the WWE, you know, all the things we’ve been kinda missin’ out on. You gotta fill that arena up. I mean, you gotta have, there’s gotta be more attractions around the area. And again, it was starting to come to fruition before the downturn and all those get put on hold and then the receivership. So that whole area, um, has a lot to gain. That’s why the city never intended to make money on the franchise, just wanted to break even which we were doin’ until we got it with that first $25 million. And then all of a sudden, you know, again, that was supposed to be short term, we were gonna get an owner. We all know the history in the last 4 years. But when you go back in and look at the lack of revenue streams that the city had, havin’ to pay a management fee, well, then you can see that, um, that’s what we needed to make this deal work. And I think that, uh, the Renaissance group has done a good job at understanding that, uh, I guess I would feel a little better if there was more equity but there’s even some, uh, you know, there’s uh, I mean there’s even some talk about maybe more sweetin’ the pot there. But that’s hyperbole (couldn’t pronounce the word correctly!) right now. So, I feel, I’ve gone from cautiously optimistic to optimistic and again, Friday will be the proof of the pudding. I believe, again, talkin’ to the NHL they wanna know by the 24th, 25th, that we’re close, uh, and then they’ll extend. There’s no magic date but they’re not gonna have a tolerance for much later than that and again, I’ve been hearin’ the date of like, the 2nd. The 9th is maybe a little too late.”

RQ 4: “Gary, I want to piggy back on the management fee because we hear so many different numbers. Have you been able to bridge the gap and I know possibly you can split the parking and some of the other stuff. Just talk about how important that is.”

SR 4: “Well, I mean we have to, I mean, everyone knows what our budget is for that and um, and we can’t afford much more right now. So, uh, yeah, I think, I think with what we say yesterday, uh, a good part of that was closed, and, uh, we’re just lookin’ for, I guess I’ll just use the word ‘certainty.’ And it’s about really, all I can really say on that. And I think it’s, uh, I think it’s, uh, I felt it was an easy things to do and we’ll see whether they come through with that, um, later today or tomorrow. And then we’ll talk about it again on Friday and then it’s hopeful that they give us mostly what we want on that and um, then we come to agreement.”

RQ 5: “All right now. Did it surprise you to learn that the NHL has had contingency plan discussions with the City of Seattle?”

SR 5: “No, not at all. I mean, that’s somethin’ that they haven’t had in the past and uh, of course, I mean there’s 5 or 6 cities there and we hear from them all the time. So, no, I mean, Quebec, I mean they really think they’re in the running. Um, Seattle’s gotten little active here recently and, you know, whether a lot of that. I know Bill Daly, Gary Bettman have been very careful not to, you know, they’ve been through this enough times. They let out just enough information to put a little hear on us and just to let us know that, you know, and again, that’s just all the gamesmanship. You know, I listen and we’ve talked on it before, I was a little surprised is that they came out last week, with um, you know, during their um, their opening press conference for the series and said what they said but again, um, they’ve got as much, ah, experience on this as we do for the last 3 and 4 years. So, I think, that they’re just lettin’ us know that, um, that they have a plan. And whether all that can happen in time or not or whether they have to play in the stadium, arena, for a couple moths, half season, um, they are still negotiating with the players’ union for the all-star, I’m sorry, for the Olympics. So that’s another reason why their schedule’s comin’ out late. I’m sure we’re another reason but it’s comin’ out later than normal and that’s probably helpful, givin’ us a little time as well but still ya have to get goin’. And it would be nice, ya know, it was reported yesterday that Tippet’s under, he started negotiations and of course ya got free agency on the 5th. So it would be nice, well, tha this wraps up in our favor in terms of keepin’ the team here and then that we can do it by the 2nd so that, um, they have a little bit more to go on for the free agency.”

RQ 6: “All right now. There were some rumblings last week that there might be a mystery party getting involved or wanting to get involved. The Commissioner, himself, has said that his phone has been ringing a lot recently. Are you guys convinced that you’ve got the best deal in front of you, the best party, the best potential partner in front of you?”

SR 6: “Yeah. I think it’s funny how at the very last moment all these other sources start bubbling to the top and yet, ya know, we’ve had this for how long? Yeah, I’m convinced of that. There was some, they were comin’ from good sources and those, um, particular potential owners admitted they were out there, you know, lookin’ at some things that maybe they hadn’t looked at before but yeah, no, it’s really way too late for that. Um, it’s been rumored that some of them, or one in particular, may just want to add some equity to, even though, they’re completely out of it they may just want to add some equity on this deal, just to help it. Just because they want to see hockey here in the Valley even though they’re not, um, local residents. They own property here. So that’s the equity piece I spoke of earlier.”

RQ 7: “Right. What’s interesting to me is OK, you guys now, if you’ve got 3 votes and you need a fourth, then you guys need to be able to discuss and come to the agreement that the deal is doable and workable for everybody. Yet, before that even happens, you have to have a trust in the motivation and long term intent of this partner and I know that this 4 or 5 year out clause and the fact that Seattle could be such a lucrative move if a team ever went that direction. There’s fears that maybe they’re using Glendale as a stepping stone to elsewhere. Can everybody get beyond that fear? Are you confident in the intent of Renaissance Sports and Entertainment?”

SR 7: “Um, I am, I mean…I mean you have that in the back of your mind. Um, you know, what’s our alternative? You know, that we just give up on this right away? And then we’re left with whatever. We’re left with which is kinda scary for me. So, you know, if you give it a shot for 5 years and everyone puts their best foot forward and see, ya know, that we continue, you know, with the same management team that guiding the Coyotes and, um, and we do see that attendance can increase and we get those reneue streams. You know, I mean again, uh, sponsors are gonna…sponsors haven’t been paying top dollar for signage and the suites and such. A low percentage of the suites are sold. You know, if all that gets put together and we show those improvements then, you know, then the owners, the new prospective owners then are gonna be convinced to keep it here. So, you know, I mean, so, 4,5 years, ah, I think it’s certainly worth it if it’s not costin’ the city anything additional. I mean, you can do the numbers and see that it costs more money, it cost the city more money without the team than with it, you know, in lost revenue. You’ve got the arena debt service regardless of what’s in there. So, the lack of development, er, the delay of development around there. And of course, you know, attracting the major events. So, yeah, I mean it’s always goin’ to be in the back of the mind. But again, what’s the alternative? You know, at least we get a 5 year chance at this and I think we’re convinced that this particular group, um, really wants to make a run at it but um, they’re not going to stick themselves with a bad deal that they can’t get out of. So, we’re not as hung up on that and when I say ‘we’ obviously I’m new to council but speaking from the city, they…they’re really hung up on that last time around. Uh, they really wanted that out of Jamison deal there was a, that, you know, there was penalty clauses for leavin’ early and do, I, we don’t have that. I don’t believe we have that in this particular arrangement and, um, and again, I don’t know that we coulda got anyone to sign up that way.”

Wow, we just saw a window into council priorities. Since January and the new council began meeting, their meetings are conducted with lightning speed, usually lasting half an hour and on rare occasion because of the sheer number of items on their agenda it may go as long as an hour. Today, June 18, 2013 there were only 6 items on their workshop agenda and it took them over an hour to deliberate. Why? Because these were all items that have a direct impact on them and their business.

Here’s the lineup:

Council has changed the voting meeting time from 7 PM to 6PM.

The Vice Mayor’s position will follow a calendar year (Jan. to Jan.) rather than the fiscal year (July to June).

Council subcommittees will remain annual appointments with a 2 year consecutive term limit. After serving 2 consecutive terms a councilmember must move to the other subcommittee (there are only two). After being off for 2 years councilmember may again sit on committee vacated.

Response time for Council Items of Special Interest remains 30 days for staff response.

Council has traded Moment of Silence for Prayer after they have opportunity to review suggested guidelines for conducting a Prayer.

Workshop meeting location has moved from Council Chambers back to its old haunt, Room B-3, or the “basement” as Mayor Weiers likes to call it.

Interim City Manager Bowers announced that at the June 25, 2013 meeting the Internal Audit will come forward. After the open meeting, Council went into Esession and it was an unusually long one for them, starting at 2:45 PM and ending at about 6:30 PM. The issues were substantive. From various statements made to the media by the City Attorney and some councilmembers there will be no vote on the Coyotes deal on June 25th. So look for June 28th or July 9th. However, Council has a vacation break in July so it makes more sense for it to become an agenda item at the specially called meeting for June 28th.

We know council was briefed on the PAD and SMG bids and council probably learned their asking price to manage the arena. It probably made Councilmember Alvarez’ heart beat faster and I imagine she offered an impassioned but hardly eloquent plea for acceptance of one of them. We know another topic of discussion was the Renaissance Sports and Entertainment (RSE) bid. Councilmember Sherwood publicly admitted that there were deal points that caused council difficulty. I would think the city’s guarantee of $15M (or X number—you fill in the blank) a year without any guarantee that there would really be the elusive $8M-$11M in enhanced revenue going to the city could have been a stumbling block. Whatever the issues were, council would have given direction to staff to go back to RSE and renegotiate those deal points. The ball in now in RSE’s court. If RSE is serious, it will have to make further concessions that demonstrate their skin in the game. Councilmember Sherwood also publicly acknowledged that the deal points need to be publicized one week before the vote. I applaud council for their stance on the side of reasonable and prudent public disclosure.

Councilmember Alvarez walked out of Esession in disgust, complaining that council was making “too many concessions” to RSE. The mere idea of entertaining the RSE bid is a “concession” in Alvarez’ mind. One other Alvarezism from the open meeting springs to mind. While discussing putting public comments at the beginning of the meeting she virtually accused her fellow councilmembers of not championing Democracy and the American Way by accusatorily saying, “We’re not dictators.”

It is time to review some previous ownership deal making history. Jerry Moyes threw the Coyotes into bankruptcy in late 2009. In 2010 Glendale and the NHL began to entertain offers for a buyer of the team. Everyone assumed that it would be a fairly quick process but that was not to be. One deal after another was rejected throughout 2010 and 2011. In order to continue the process the NHL held up the city to the tune of $25M a year. In 2012 Greg Jamison entered the picture and a majority of council (I being one of that majority) believed we had a solid deal that was in the best interest of the city.

In June 2012 a majority of council made two significant votes. One was to accept the Jamison deal after the management fee had been reduced and penalty/incentive clauses were added. During contentious council discussions Interim City Manager Skeete presented the council information about the financial impacts of keeping the Coyotes or losing them. One of the bullet points that I remember to this day stated that over the 20 year life of the deal Glendale was better off by some $20M by keeping the team. Skeete, at that time, had worked out a financial plan that called for budget cuts over 5 years. Many became confused and blamed those projected budget cuts on keeping the Coyotes. Not so. Those budget cuts were in anticipation of losing the sales tax increase in 5 years. His plan was solid, accommodated keeping the team and was in the best interest of the city.

That same month a majority of council voted to raise Glendale’s sales tax for a period of 5 years. A fire storm lasting 6 months erupted. Ken Jones, virtually single-handedly, although the Goldwater Institute was lurking about and seen helping Mr. Jones on occasion (later they would part ways), mounted a Referendum petition drive to reject council’s vote on the Coyote deal. He failed but it created unanticipated delay. Shortly on the heels of that effort another group began an Initiative petition drive to get rejection of the sales tax increase on the November, 2012 ballot. They were successful and the voters rejected their initiative in the November election. But it created further unanticipated delay. These folks were not working to further the best interest of the city.

Anthony LeBlanc

The city imposed a deadline of January 31, 2013 for Jamison. He failed to meet that deadline and that is a story for another time. In May of this year the NHL identified Renaissance Sports and Entertainment (RSE) as a buyer of the team and rejected the Pastor bid outright. Has it occurred to anyone that RSE is, in fact, the ONLY bidder the NHL has? To this day they have never made a formal announcement of RSE as the buyer. Is this deal in the best interest of the city?

There are some councilmembers who understand that keeping the team is vital to the city but they are having problems guaranteeing that $15M a year that RSE has said it must have. They are between “a rock and a hard place.” It reminds me of the original Ellman deal. At one point council was presented a “bucket list” graphically. One of the diagrams showed an enormous amount of revenue being literally poured into city buckets. Unfortunately those buckets filled with oodles of revenue to the city never materialized. “Fool me once, shame on you. Fool me twice, shame on me.” Now the current council is being presented with another version of a “bucket list.” This time RSE had identified additional revenue streams that will reimburse the city for its guaranteed pledge of $15M a year for a lease management fee. Some have asked why doesn’t the city just pay the $6M a year and RSE keeps ALL of the additional revenue streams itself. It accomplishes the same thing. The assumption is that to satisfy its lenders RSE must show that it has an annual guaranteed source of $15M. Who better to guarantee that amount than a city? The problem is, will those additional revenue stream buckets fill up as assumed? No one knows. Those additional revenue streams could bring $4M or $5M a year to the city or (hallelujah chorus) they could earn $11M a year. Yet the city will guarantee $15M a year. Why is it the city’s responsibility to assume this financial risk on behalf of RSE? Is it in the best interest of the city?

Let me be very, very clear. I want the team to remain in Glendale but not if it does further financial harm to a great city that I love. My frame of reference for any deal has been in terms of whether it meets the best interest of Glendale. I have demonstrated my commitment by voting in the affirmative for the Jamison deal and subsequently losing my council seat. If not for my vote and that of 3 others, there would be no RSE deal to consider today. I want a clean deal that the city can afford to pay and I suspect some councilmembers want that as well. Can they make that happen? We won’t know until the deal is made public. I, for one, will be reading every comma, period and paragraph. Only then will we truly know if this deal is in the best interest of Glendale.